Foreign-invested Construction Enterprises: The Next Legal Step

As part of its initiative to transform the role of foreign investment in the PRC construction sector, on April 8 2003 the Ministry of Construction issued the Relevant Administration of Qualifications in the Administration of Foreign-invested Construction Enterprises Provisions Implementing Procedures (the Implementing Rules). These rules bolster the Administration of Foreign-invested Construction Enterprises Provisions (外商投资建筑业企业管理规定) (the FICE Provisions), which became effective on December 1 2002. They also clarify certain issues regarding activities during a transitional period in which foreign-invested enterprises can apply for "qualification certificates".

Prior to the issuance of the FICE Provisions, foreign construction companies could only undertake construction projects in China on a project-specific basis by obtaining a "foreign contractor qualification certificate" and a PRC business licence. In contrast, the FICE Provisions require foreign contractors to establish a foreign-invested construction enterprise (FICE) if they wish to carry out construction projects in China. Not only are foreign investors now required to establish a proper PRC company to do construction work in China, but also FICEs can now engage in multiple independent projects and are not limited to one particular contract.